Spotlight on economy: What to watch for in Thursday’s GDP report

The government on Thursday will tell us how fast the economy grew in third quarter, but most economists are already looking past the number. They’re waiting to see how the economy responds to the disruption caused by the federal shutdown in October that took place after the period ended.

The third-quarter numbers, however, should still prove interesting. Although economists surveyed by MarketWatch predict the U.S. likely expanded by 2.3%, some see growth as high as 2.7% while others predict 1.7% or even less.

The gap reflects a wide range in the forecasts on how much government spent and businesses invested, with business spending being particularly hard to pin down.

In the preliminary GDP report, the government typically estimates the amount of construction spending, business capital investment and inventory buildup for the final month of the quarter (actual figures are available in the next revisions of GDP). Coming up with estimates is hard enough, but the shutdown also delayed the collection of some data. That’s compounded the uncertainty.

Whatever the case, economists agree on one thing. The U.S. is not growing all that fast. The economy expanded at a 1.1% pace in the first quarter and 2.5% in the second, with most forecasts pegging fourth-quarter growth at around 2.2%.

In the third quarter, consumer spending appears to have been soft but steady while companies restocked warehouse shelves a bit faster in anticipation of holiday-season sales. What’s less clear is if government spending will improve after sequester-related budget cuts earlier in the year. Eventually the effects of those cuts are expected to fade.

Business investment in capital goods, meanwhile, probably tapered off, and the resurgent housing sector likely won’t contribute as much to growth as it has in the prior quarters owing to a sharp uptick in mortgage rates.

The upshot: The U.S. economy did not head into the government shutdown with much momentum. And it may take awhile to figure out if the latest budget blowup in Washington hampers growth going forward or merely proves to be a blip on the radar screen.

The GDP report will be released Thursday at 8:30 a.m. Eastern. At the same time, the Labor Department will issued jobless claims for the week ended Nov. 2.

Claims are forecast to fall to 335,000 from 340,000. They fell sharply in early September then surged in October largely because of ongoing computer-system problems in California that resulted in major processing delays. The state claims it has mostly fixed the problem.